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Business News/ Companies / News/  Adani probe widens as Sebi checks bank a/cs

MUMBAI : The Securities and Exchange Board of India (Sebi) plans to deepen its investigation into the financial transactions of Adani group companies, delving into the conglomerate’s complex business dealings of the past decade by examining their bank accounts, according to an application filed before the Supreme Court on 29 April, seeking an extension of six months.

In response to a public interest litigation (PIL) plea, the Supreme Court directed Sebi to investigate the Adani Group’s business activities. The PIL followed a 24 January report by US-based short-seller Hindenburg Research, accusing the group led by Gautam Adani of accounting fraud and stock manipulation.

The Hindenburg report, which Adani Group dismissed as baseless, led to a $145 billion fall in the market value of the conglomerate’s listed companies till 26 February.

Graphic: Mint
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Graphic: Mint

“In respect of the investigation relating to 12 suspicious transactions (alleged by the Hindenburg report), prima facie, it is noted that these transactions are complex," Sebi said. “This analysis will include a detailed examination of bank statements of the concerned entities for the relevant period. (The allegations span over 10 years)."

While the stocks of listed Adani Group firms continue to be under pressure, Sebi has sent multiple queries between 12 February and 22 April to seven key listed Adani group firms—Adani Enterprises Ltd, Adani Power, Adani Transmission, Adani Green Energy, Adani Ports and Special Economic Zone, Adani Total Gas and Adani Wilmar.

Based on its findings so far, Sebi said it has already formed a “prima facie" view on allegations made by Hindenburg regarding 12 suspicious transactions by Adani Group for possible violations related to misrepresentation of financials, circumvention of regulations and fraudulent nature of the transactions.

However, Sebi said a detailed investigation of the 12 suspicious transactions will take time as they are complex, and have many sub-transactions.

To complete its investigation, Sebi has sought documents related to the “loans", “connected entities involved in transactions", “extracts of bank statements", and “details along with proof of repayment of loans taken, if any, with copies of bank statements reflecting such payments," from seven Adani group firms, their subsidiaries, step-down subsidiaries as well as other private entities allegedly involved in the (12 suspicious ) transactions.

Sebi is faced with the uphill task of digging into a complex maze of transactions involving Adani group firms, which were carried out over a period of over 10 years.

The apex court has tasked Sebi to determine if there was any breach of securities laws, failure to disclose related-party transactions (RPTs), or manipulation of stock prices.

Sebi, in its latest application, said while such thorough investigations typically take more than 15 months, considering the significance of the Adani-Hindenburg case, it will speed up the probe, but would require at least six more months to draw a conclusion. The probe will involve obtaining and scrutinizing “voluminous bank statements" from multiple domestic and international banks for all transactions undertaken for over 10 years, it added.

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Priyanka Gawande
Priyanka Gawande is a senior legal correspondent at Mint. She has worked as legal reporter for four years with both television and digital mediums. Based in Mumbai, she reports on disputes across sectors including banking, corporates and finance. This also includes insolvency and bankruptcy cases and intellectual property rights (IPR) litigation. Her focus also comprises tracking capital markets and disputes relating to securities law. Previously, Priyanka worked with Informist Media for 2.5 years covering major insolvency and bankruptcy cases and corporate developments. She started her career in journalism with Business Television India (BTVi) where she reported on primary markets, banking, finance and insurance companies.
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Updated: 02 May 2023, 12:08 AM IST
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